U.S. Markets closed

Muted Trading Performance to Hurt BofA's (BAC) Q1 Earnings

Zacks Equity Research

Following an impressive 2018 performance driven by significant volatility and higher volumes, client activity slowed down in first-quarter 2019. Hence, Bank of America’s BAC trading revenues (constituting a substantial part of its top line) will likely get hampered and have an adverse impact on its overall results to be announced on Apr 16, before market open.

Several concerns, including a few lingering ones from the prior quarters like uncertainty related to Brexit and U.S.-China trade war, and expectations of global economic slowdown continued during the first quarter. Further, the U.S. government shutdown and other lingering economic uncertainties had an adverse impact on investors’ sentiments.

Despite these concerns, performance of equity markets was strong. But that was not enough to result in a significant increase in client activity and volumes. Thus, overall volatility remained on a lower side. Additionally, the last-year quarter was usually strong in terms of trading performance.

Therefore, BofA’s trading revenues in the to-be-reported are expected to record muted performance.

Overall Earnings & Revenue Growth Expectations

For BofA, the Zacks Consensus Estimate for earnings of 65 cents reflects 4.8% growth on a year-over-year basis. Also, the consensus estimate for sales of $23.2 billion indicates a 0.5% increase.

Bank of America Corporation Price and EPS Surprise


Bank of America Corporation Price and EPS Surprise | Bank of America Corporation Quote

Click here to know about the other factors that are likely to impact BofA’s overall results.

Our Take

During the first quarter, the operating backdrop was decent. Modest loan growth and higher rates will likely support this Zacks Rank #3 (Hold) stock’s revenues to some extent. However, lower trading revenues along with dismal growth in investment banking are expected to be major headwinds.

(You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.)

Trading Revenue Projections for Other Companies

Trading revenues also form a major portion of total revenues for JPMorgan JPM, Citigroup C and Morgan Stanley MS. Like BofA, dismal trading performance will likely hurt these banks’ revenues and earnings in the first quarter.

Radical New Technology Creates $12.3 Trillion Opportunity

Imagine buying Microsoft stock in the early days of personal computers… or Motorola after it released the world’s first cell phone. These technologies changed our lives and created massive profits for investors.

Today, we’re on the brink of the next quantum leap in technology. 7 innovative companies are leading this “4th Industrial Revolution” - and early investors stand to earn the biggest profits.
See the 7 breakthrough stocks now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
Citigroup Inc. (C) : Free Stock Analysis Report
Bank of America Corporation (BAC) : Free Stock Analysis Report
Morgan Stanley (MS) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research